Lecture topic:Responsive-Pricing Retailer Sourcing from Competing Suppliers
Keynote speaker:Professor Tao LI, Santa Clara University
Lecture time: November 14,2020
Venue: Focus on public logistics [keeps], or join a mailing list (https://www.wjx.cn/jq/97050529.aspx), get the meeting ID and password
Abstract
Problem definition: We study a problem of a retailer who orders from two competing strategic suppliers subject to independent or correlated disruptions and responds by setting the retail price upon delivery, which we call responsive pricing. The suppliers compete by setting their wholesale prices.
Academic/Practical Relevance: Supplier disruption correlation exists for reasons such as product and service designs, geographic proximity, and common tier 2 suppliers. In practice, many retailers are able to set the product price after knowing the delivered quantity.
Methodology: We model this problem as a Stackelberg-Nash game with the suppliers as the leaders and the retailer as the follower, and obtain its equilibrium explicitly. We perform sensitivity analyses with respect to suppliers' production costs, reliabilities, and their correlation.
Results: We find surprisingly that an increase in the reliability of a supplier may, counter to our intuition, hurt him due to the competition between the suppliers selling to a responsive-pricing retailer. Furthermore, in contrast to the literature, we find that under responsive pricing, a high disruption correlation may benefit a supplier who has a cost advantage, and the total order quantity may increase in that correlation due to supplier competition.
Managerial Implications: This paper has important implications for unreliable suppliers because the way reliability and correlation influence their profits depends on the retailer's pricing power and the competition intensity between the suppliers. With a responsive-pricing retailer, a supplier may not benefit from a higher reliability but may benefit from a higher correlation. This explains why a supplier with a cost advantage may have an incentive to create a positively correlated supply network by building plants in the geographic location of his competitor, or sourcing from the same tier 2 supplier to obtain a higher correlation strategically.
Introduction：
Tao Li is the director of MS Program in Business Analytics and an associate professor of Information Systems & Analytics in the Leavey School of Business at Santa Clara University. He joined the Business School in Fall 2012 as an assistant professor after graduating with his Ph.D. from The University of Texas at Dallas.
Professor Li’s research interests include sharing economy, crowdfunding, strategic sourcing, supply chain coordination, operations-marketing interface, sustainable operations management, and behavioral operations management. His scholarship has appeared in leading academic journals such as Production and Operations Management, Manufacturing & Service Operations Management, European Journal of Operational Research. His scholarship has been supported by the Santa Clara University Research Grant and the Leavey Research Grant. He is the recipient of the Leavey School of Business Extraordinary Research Award multiple times.
Professor Li teaches Operations Management and Prescriptive Analytics for the Business School's accelerated and evening MBA program and undergraduate core curriculum. He also teaches Data Analytics with Python and Machine Learning for the MS programs in Business Analytics, Information Systems, and Finance. He is the recipient of the ACE (Accelerated Cooperative Education Leadership Program) Outstanding Faculty Award in 2016 and 2019, and the Leavey School of Business Extraordinary Teaching Award multiple times.
Professor Li serves as Senior Editor for Production and Operations Management, Associate Editor for Transportation Research Part E: Logistics and Transportation Review, and Guest Associate Editor for Naval Research Logistics. He has been a regular reviewer for top journals including Management Science, Operations Research, and Manufacturing & Service Operations Management.
